Boris Vujčić urges simpler bank rules and deeper European integration

European Central Bank Vice-President Boris Vujčić called for simpler bank rules and deeper financial integration in a speech in Frankfurt on 2 October 2026, arguing that a more unified European market would do more for banks’ competitiveness than cutting capital requirements. Addressing the European Systemic Risk Board’s annual conference, he said stronger banks are better placed to keep lending when economic conditions deteriorate.

Vujčić’s argument joins two parts of the European banking debate: how to reduce the burden of complex rules, and how to let banks operate more easily across national borders. He presented simplification as compatible with resilience, while identifying financial integration as the stronger route to scale and competitiveness. The speech set out policy recommendations and work already under way; it did not enact new capital rules or complete the banking union.

Which bank rules does Vujčić want simplified?

Vujčić pointed to recommendations made by the ECB Governing Council at the end of 2025. Under those proposals, existing risk-based capital buffers would be combined into two: a non-releasable buffer and a releasable buffer. The ECB also proposed reducing the leverage-ratio capital stack from four elements to a 3% minimum requirement and one buffer. Those are proposed changes to the structure of requirements, rather than a decision announced in Friday’s speech to lower banks’ overall protection.

The recommendations would bring the EU’s minimum requirement for own funds and eligible liabilities, known as MREL, closer to the international total loss-absorbing capacity framework, or TLAC. Vujčić said this should happen without reducing resources available if a bank has to be resolved. He also cited a dedicated, simpler regime for smaller banks, calibrated more conservatively to preserve resilience.

Why he doubts a capital cut would lift lending now

Vujčić challenged the argument that reducing capital requirements would materially increase credit under current conditions. He said the median Tier 1 capital ratio at euro-area banks has risen from about 8% in 2009 to more than 16% in 2026. He also cited stronger profitability, an average price-to-book ratio of about 1.5 and growing aggregate capital headroom. Those figures come from his speech and its referenced presentation slides.

In his reading of banks’ second-quarter 2026 reports, profitability improved further, leaving regulatory capital unlikely to be the current binding constraint on lending. He said euro-area bank lending surveys instead point to risk perceptions, banks’ willingness to take risk and uncertainty about the economy as leading reasons for tighter credit standards in recent years. Loan demand, he added, has remained subdued. On that basis, he said a reduction in capital requirements was very unlikely to produce a material increase in lending now.

That assessment is specific to current conditions. Vujčić acknowledged that studies of capital rules and lending reach different results: some find a short-term reduction in credit supply when requirements rise, while others find no significant effect. He said the impact varies with banks’ strength and the wider economy. His speech also pointed to better-capitalised banks’ ability to meet demand during the pandemic and to euro-area banks’ resilience amid market tensions in 2023.

A 2021 ECB Financial Stability Review analysis gives a more detailed view of the pandemic period. Its authors found that banks with little capital space above regulatory buffers reduced lending more than other banks, while regulatory capital relief was associated with higher credit supply. They said further research was needed, including at the level of the banking system as a whole. Those findings describe lending during a crisis; they do not establish what a general reduction in requirements would do in 2026.

How cross-border banking fits the Commission’s agenda

Vujčić said lending across borders within the euro area accounts for about 16% of total corporate lending, compared with roughly 20% going to corporate borrowers outside the euro area, mainly in the United States and United Kingdom. In his view, those figures show how little the single market has done to bring corporate banking across euro-area borders. He said recent increases in banking-sector concentration have come mainly from domestic mergers and acquisitions, leaving EU-level concentration below that of the United States.

He called for completion of the banking union and capital markets union, including a European deposit insurance scheme. He described common deposit insurance as the missing pillar needed to protect deposits equally across the euro area and help build confidence in cross-border banking. He also identified differences in national tax and insolvency rules as obstacles to investment across Europe. These are proposals for further integration, not outcomes already delivered by the speech.

The European Commission adopted a communication on banking-sector competitiveness and the single market in July 2026, framing integration alongside financial stability. In original reporting on that communication, EL PAÍS described the Commission’s push to ease cross-border banking and address national barriers to mergers, alongside continued work on deposit insurance. Vujčić’s remarks add the ECB vice-president’s case for that direction, while leaving the timing and final form of any legislative changes open.